Plot
After his victory over Ivan Drago in Moscow, Rocky Balboa finds himself experiencing physical trauma from the fight. He returns with his wife Adrian, brother-in-law Paulie, and trainer Tony "Duke" Evers to the United States, where Rocky's son Robert Jr. greets the group. At a press conference, boxing promoter George Washington Duke attempts to goad Rocky into fighting his boxer, Union Cane, who is the top-rated challenger, but Rocky declines.
When the group returns home, however, Rocky and Adrian discover they are bankrupt after Paulie was fooled into signing a "power of attorney" over to Rocky's accountant, who embezzled all of his money on unfavorable real estate deals and neglected to pay Rocky's taxes over the previous six years. He is unable to secure a merchandising deal due to his history as a loan shark resurfacing, and his mansion has been mortgaged by $400,000, but his attorney tells Rocky that it is fixable with a few more fights. Rocky initially accepts the fight with Cane, but Adrian urges him to see a doctor, and he is diagnosed with cavum septi pellucidi.
Reluctantly, Rocky retires from boxing. His home and belongings are sold to pay the debt and the Balboas move back to their old working-class neighborhood in Philadelphia. Rocky visits Mighty Mick's Gym (willed to his son by his old trainer Mickey Goldmill), which has fallen into disrepair. Seeing a vision of himself and Mickey from years past, Rocky draws inspiration to become a trainer himself and reopens the gym. One day, Paulie and Rocky meet a young fighter from Oklahoma named Tommy Gunn. Under Rocky's management, Tommy rises to become a top contender. Distracted with Tommy's training, Rocky neglects Robert, who is being bullied at school. After learning to defend himself, Robert falls in with the wrong crowd and becomes withdrawn from his family.
Union Cane wins the vacant world heavyweight title, but still wanting to do business with Rocky, Duke showers Tommy with luxuries and promises him that he is the only path to a shot at the title. Rocky insists dealing with Duke will end badly, causing Tommy to desert him. Adrian attempts to comfort Rocky; when he frustratedly retorts that training Tommy had renewed his sense of purpose, she pointedly tells Rocky that Tommy never had his heart. Realizing that his family is his top priority, Rocky apologizes to Adrian and the two embrace. Rocky then apologizes to Robert and they mend their relationship.
Tommy defeats Cane for the heavyweight title with a first-round knockout, but the spectators reject him for abandoning Rocky and crediting his success solely to Duke. Consequently, the fans and media denounce Tommy as a "paper champion" because he did not win the title from Balboa. Duke convinces Tommy that he needs to secure a fight with Rocky to refute such a notion. Duke and Tommy show up at the local bar with a live television crew to goad Rocky into accepting a title fight. Rocky declines and tries to reason with him, but Tommy calls him weak, prompting Paulie to stand up for Rocky. When Tommy punches Paulie, Rocky challenges Tommy to a street fight on the spot; despite Duke's objections, Tommy accepts.
Initially knocked to the ground by Rocky's flurry of punches, Tommy gets up and attacks Rocky from behind, punching him to the ground. Rocky experiences nightmarish visions of Drago before a vision of Mickey urges him to get up and continue the fight. When Robert and Adrian see the brawl being televised, they rush to the back alley to cheer for Rocky. With Robert, Paulie, Adrian and the neighborhood crowd cheering him on, Rocky utilizes his street-fighting skills and defeats Tommy. While Tommy is escorted away by the police, Duke threatens to sue Rocky if he touches him. Rocky briefly hesitates before knocking him onto the hood of a car, defiantly replying "Sue me for what?"
Months later, Rocky and Robert climb up the Rocky Steps, visit his statue, and are about to go inside and explore the Philadelphia Museum of Art when Rocky gives his son Rocky Marciano's cufflink, which Mickey had gifted to Rocky years earlier.